Federal charges against Malinsky dropped

Federal prosecutors agreed to drop a multi-count indictment against real estate developer Aaron Malinsky, who was charged earlier this year with paying about a half-million dollars in bribes to state Sen. Carl Kruger.

Malinsky, founder of Manhattan-based PA Associates, was charged in March with bribing Kruger in connection with several real estate projects linked to his firm, including Canarsie Plaza, a big-box retail project on Avenue D in Brooklyn.

Malinsky and lobbyist Richard Lipsky were later accused in an 11-count indictment of committing mail and wire fraud, allegedly funneling hundreds of thousands in bribes to Kruger through Michael Turano, a gynecologist who was a companion of Kruger’s. Lipsky and Turano were charged in connection with the case.

Under a so-called deferred prosecution agreement, U.S. Attorney Preet Bharara will officially dismiss the case against Malinsky if he stays out of trouble for six months, according to legal sources and court documents obtained by The Real Deal.

The agreement was approved by U.S. District Judge Jed Rakoff.

Malinsky’s attorney Scott Mollen, a partner at Herrick, Feinstein, said in a statement: “Mr. Malinsky and his family feel relieved, vindicated and grateful that this terrible cloud has been lifted. He now looks forward to resuming his business of developing urban retail shopping centers in the many under-stored neighborhoods of this city.”

The indictments took a significant bite out of Malinsky’s business. After the initial indictment, PA Associates was removed as the developer of City Point, a mixed-use tower at the former Albee Square Mall in Downtown Brooklyn. The firm was also removed as the developer of a $60 million Shop Rite project by the Brooklyn Navy Yard Development Corp.

Sources familiar with the matter said the case against the other defendants is moving forward.

Lipsky’s attorney Gerald Lefcourt was not immediately available for comment, and nor were Turano’s attorney, Robert Katzberg, nor a spokesperson for Kruger. A spokesperson for the U.S. Attorney’s office declined to comment.